WASHINGTON -- If you thought the Dubai port deal marked a record high in Washington cynicism, think again. Nothing can match the spectacle of politicians scrambling for cover during a spike in gasoline prices. And this time, the panderfest has gone all the way to the Oval Office. President Bush has joined the braying congressional hordes by ordering the Energy and Justice Departments and the FTC to launch an investigation into possible gasoline price-fixing. What a disgrace. Precisely 10 years ago (April 29, 1996) as gas prices reached a shocking $1.27 a gallon, President Clinton ordered his Energy and Justice Departments to launch investigations to find out why. In my column that week, I offered a wild guess as to why: "Supply is down and demand is up.'' I offered Energy Secretary Hazel O'Leary and Attorney General Janet Reno a $100 bet (I roll high on sure things) that their million-dollar probes would do nothing more than confirm my hunch. No takers. Even Cabinet secretaries don't throw C-notes away. Sure enough, months later these perfectly pointless investigations discounted charges of price gouging and attributed the price hike to ... increased demand and decreased supply. Today, every time an Iranian mullah opens his mouth about nukes, the risk premium for Persian Gulf supply interruptions jumps again. Crude oil prices alone account for about $1.70 of what you pay for a gallon at the pump. So 10 years later, I'll wager again. Here's what the Bush search for price gougers and profiteers will find: (1) Demand is up. China has come from nowhere to pass Japan as the number No. 2 oil consumer in the world. China and India -- between them home to eight times the U.S. population -- are industrializing and gobbling huge amounts of energy. American demand is up because we've lived in a fool's paradise since the mid-1980s. Until then, beginning with the oil shocks in 1973, Americans had changed appliances and cars and habits and achieved astonishing energy conservation. Energy use per dollar of GDP was cut by 30 percent in little over a decade. Oil prices collapsed to about $10 a barrel. Then amnesia set in, MPG ratings disappeared from TV ads and we became ``a country of a million Walter Mittys driving 75 mph in their gas-guzzling Bushwhack-Safari sport-utility roadsters with a moose head on the hood, a country whose crude oil production has dropped 32 percent in the last 25 years but which will not drill for oil in the Arctic National Wildlife Refuge for fear of disturbing the mating habits of caribou." I wrote that during the '96 witch hunt for price gougers. Nothing has changed. Except that since then, U.S. crude oil production has dropped an additional 12.3 percent. Which brings us to: (2) Supply is down. Continued... |